BoG – Reduction of the balance of payments deficit with tourism as the catalyst

In November 2021, the current account deficit increased compared to the corresponding month of 2020, due to the deterioration of the balance of goods and the balances of primary and secondary income, which was partially offset by the improvement of the balance sheet, published by the Bank of Greece.

In the period January-November 2021, the current account deficit decreased compared to the corresponding period of 2020, due to the increase in the services surplus and the improvement of the primary and secondary income balances, which were offset by the balance of goods.

Current Balance

In November 2021, the current account deficit widened by € 1.3 billion compared to the corresponding month of 2020 and stood at € 2.5 billion.

The increase in the goods deficit is due to the increase in imports, which was higher than in exports. The increase in total exports and imports by 58.7% and 70.4% respectively reflects the rise in prices, mainly of fuels. At constant prices, the growth rates of exports and imports were 19.8% and 36.3% respectively. In particular, exports of non-fuel goods increased by 44.2% at current prices (31.8% at constant prices) and imports of non-fuel goods increased by 42.0% at current prices (33.7% at constant prices). ).

The increase in the services surplus was mainly due to the improvement in the travel balance and, to a lesser extent, the transport balance. Arrivals of non-resident travelers and related receipts increased by 219.3% and 308.2% respectively and amounted to 60% and 91% of those of November 2019 respectively. The transport surplus increased, mainly due to the improvement of the maritime transport surplus.

The primary income balance deficit increased compared to the corresponding month of 2020, mainly due to the increase in net payments for interest, dividends and profits. The secondary income deficit also increased slightly.

In the period January-November 2021, the current account deficit narrowed by 1.4 billion euros compared to the corresponding period of 2020 and amounted to 8.9 billion euros.

The increase in the goods deficit is due to the larger increase in imports compared to exports in absolute terms. More specifically, exports increased by 36.4% at current prices (14.2% at constant prices) and imports by 35.6% at current prices (13.3% at constant prices). Exports of non-fuel goods increased by 27.5% at current prices (21.2% at constant prices) and imports of non-fuel goods increased by 27.1% at current prices (24.1% at constant prices).

The increase in the services surplus is due to the improvement in the travel services balance, which, however, was partially offset by the reduction in the transport balance surplus. Arrivals of non-resident travelers increased by 96.8% and related receipts by 144.6% compared to the same period in 2020, representing 47% and 59% of the respective levels of 2019. Net receipts from transfers decreased by 8.3%.

The primary income balance was in surplus compared to the deficit in the corresponding period of 2020, mainly due to the reduction of net payments for interest, dividends and profits, while the surplus of the secondary income balance increased due to the rise in net general government revenues.

Capital Balance

In November 2021, the capital balance recorded a surplus of 464 million euros, an increase of 119 million euros compared to that of the same month of 2020. In the period January-November 2021, the capital surplus recorded an increase of 1.4 billion compared to the same period in 2020 and amounted to 3.6 billion euros.

Total Balance of Current Transactions and Capital

In November 2021, the total current account and capital deficit (which corresponds to the needs of the economy for foreign financing) increased compared to November 2020 and amounted to 2.1 billion euros. In the period January-November 2021, the total current account and capital deficit was reduced compared to the corresponding period of 2020, by 8.1 billion euros, to € 5.3 billion.

Financial Transaction Balance

In November 2021, in the category of direct investments, the net liabilities of residents to foreign countries (corresponding to foreign direct investments in Greece) increased by 668 million euros. The most important transactions concern: a) the 10% participation of Selath Holdings S.à r.l. (Luxembourg), which is controlled by CVC Capital Partners SICAV-FIS S.A., in the share capital increase of PPC SA. and b) the sale of Intrasoft International S.A. to Netcompany Group A / S (Denmark).

In portfolio investments, the increase in residents’ receivables from abroad is mainly due to the increase by 4.1 billion euros of their investments in bonds and bonds abroad. The increase in their liabilities is due to the increase by 742 million euros of non-resident placements in shares of Greek companies, which was offset by the decrease by 461 million euros of non-resident placements in bonds of the Greek State.

In the category of other investments, there was an increase in residents’ receivables from abroad, which mainly reflects the statistical adjustment (762 million euros) associated with the issuance of banknotes, the increase by 410 million euros of loans granted to non-residents and the reduction by 414 million euros of the residents’ investments in deposits and repos abroad. The increase in their liabilities is due to the increase by 4.9 billion euros of non-resident placements in deposits and repos in Greece (including the TARGET account).

In the period January-November 2021, in the category of direct investments, residents ‘receivables from abroad increased by 885 million euros and residents’ liabilities to foreigners, corresponding to direct investments of non-residents in Greece, increased by 4 , 7 billion euros.

In portfolio investments, the increase in residents ‘receivables from abroad is mainly due to the 20.3 billion euro increase in residents’ investments in bonds abroad. The increase in their liabilities is due to the increase in the holdings of non-residents in bonds and interest-bearing bills of the Greek State by 2.2 billion euros and in shares of Greek companies by 2.1 billion euros.

In the category of other investments, the increase in residents’ receivables from abroad is due to the increase of 2.9 billion euros in loans to non-residents and the statistical adjustment related to the issuance of banknotes by 3.8 billion euros. , which was partially offset by a € 1.7 billion reduction in residents’ deposits and repos abroad. The increase in their liabilities mainly reflects the increase by 17.1 billion euros of non-resident placements in deposits and repos in Greece (including the TARGET account).

At the end of November 2021, the country’s foreign exchange reserves amounted to 12.5 billion euros.